the transition from a linear to a circular logic: case
TRANSCRIPT
The transition from a linear to a circular logic: Case studies of MNEs in the FMCG-industry.
Master Thesis by Nora Wei Qeen Foo MSc Business Administration - International Management
N.W.Q. Foo
Student Number: 11233079
First Reader: Francesca Ciulli
Second Reader: Erik Dirksen
Date: 26/01/2017
Word Count: 20860
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Statement of originality This document is written by Nora Wei Qeen Foo who declares to take full responsibility for
the contents of this document. I declare that the text and the work presented in this document
is original and that no sources other than those mentioned in the text and its reference have
been used in creating it. The faculty of Economics and Business is responsible solely for the
supervision of completion of the work, not for the contents.
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Table of Contents
1. ABSTRACT 3
2. INTRODUCTION 4
3. LITERATURE REVIEW 9
3.1. INSTITUTIONAL LOGICS 93.2. INSTITUTIONAL CHANGE AS SHIFT FROM A LINEAR TO CIRCULAR LOGIC 113.3. BUSINESS MODEL AND SUSTAINABILITY-ORIENTED BUSINESS MODEL INNOVATION 153.4. MNES AND (SUSTAINABILITY-ORIENTED) BUSINESS MODEL INNOVATION 19
4. THEORETICAL FRAMEWORK 21
5. METHODOLOGY 25
5.1. RESEARCH DESIGN 255.2. CASE SELECTION 255.3. DATA COLLECTION 285.4. DATA ANALYSIS 29
6. RESULTS 33
6.1. WITHIN CASE ANALYSIS 336.1.1. UNILEVER 336.1.2. NESTLÉ 376.1.3. DANONE 426.1.4. COCA-COLACOMPANY 476.2. CROSS-CASE ANALYSIS 52
7. DISCUSSION 55
7.1. PROPOSITIONS 557.2. THEORETICAL AND MANAGERIAL CONTRIBUTIONS 607.3. LIMITATIONS AND AVENUES FOR FUTURE RESEARCH 62
8. CONCLUSION 64
9. ABBREVIATIONS 67
10. REFERENCES 68
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1. Abstract Sustainability has become an increasing topic of conversation in the corporate world. The
earth’s natural fuels are suffering exhaustion, and the amount of pollution is increasing. This
is where the circular economy comes to light. Organizations who operate the circular economy
turn goods that are at the end of their lifecycle into resources for others, close loops in industrial
ecosystems, and minimize waste. This study will address how institutional change is able to
trigger business model innovations, and will thereby focus on the adoption of practices, values,
and beliefs consistent with the circular logic.
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2. Introduction In the last decade both scholars and practitioners have increasingly underlined the need for
businesses to change the economic logic that guides their activities, and move from a ‘linear’
logic towards a ‘circular’ logic, in order to, on one side, to reduce their impact on the
environment and, on the other side, to decrease their costs and seize new business opportunities.
The linear logic consists in the adoption of a ‘take-make-dispose’ model, i.e. in the lifecycle of
water bottles; after the consumer has used its content, the bottle will be disposed and not used
for further purposes. While organizations that operate a circular economy turn goods that are
at the end of their lifecycle into resources, close loops in industrial ecosystems, and minimize
waste. Different definitions have been developed of the circular economy, however according
to Murray et al. (2015, p.1) it is generally agreed that it is “an economic model wherein
planning, resourcing, procurement, production and reprocessing are designed and managed,
as both process and output, to maximize ecosystem functioning and human well-being.”
The circular economy is gradually becoming an idea accepted by policy makers and
businesses. Companies have increasingly transformed their business models to integrate a
circular logic, yet this process is still in its initial stages. In particular, for large, multinational
companies (MNEs), given their visibility and their significant use of resources, the
commitment to a circular model is increasingly crucial for their legitimacy and it may also be
financially profitable, but, at the same time, it represents a critical challenge, due their complex
‘activity system’ (Zott & Amit, 2010).
Despite the widespread call for a shift towards a circular economy, this subject has been
overlooked by management scholars, with very few exceptions (e.g. Murray et al., 2015;
Kortmann & Piller, 2016). A signal of a rising interest in management research is represented
by the call for papers on “Circular Economy: Managerial and Policy Implications”, published
recently by the California Management Review. However, neither the published papers or the
call for paper focuses on multinational enterprises (MNEs). Yet, examining how MNEs change
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their activities towards circularity is particularly valuable. Due to MNEs’ presence in multiple
countries, implementing the circular economy is a particularly complex process, as it requires
the transformation of an international system of activities.
The circular economy has become a highly relevant concept to examine, given the
increasing popularity of academic debates on sustainable and socially responsible business
(Russo & Tencati, 2008; Junior et al., 2013; Dossa & Kaeufeur, 2013). The adoption of both
the institutional theory and the business model lens is particularly appropriate to explore this
topic. Indeed, the shift from a linear to a circular economy requires a change both in companies’
‘material practices’ (Thornton & Ocasio, 1999), i.e. in their ‘activity system’ (Zott & Amit,
2010), and in the norms, values, and rules that guide them. For a MNE to achieve a fully closed-
loop system it has to engage in a substantial change of the values and principles, i.e. the
institutional logic that guide its activities and shift from linear to a circular logic. The linear
logic focuses on the conversion of natural resources into waste, through production. The
circular logic encompasses the principles of restoring any damage done in resource acquisition
while ensuring little waste is generated throughout the production process and in the life history
of the product (Murray et al., 2015). The emergence of a circular logic has led scholars and
practitioners to call for companies to innovate their business model, by integrating practices
that are consistent with the beliefs of the circular economy. Thus the change in logic has to be
reflected in a transformation of the MNE’s ‘material practices’, i.e. the system of activities on
which its business is founded.
Both the literature exploring the process of institutional logic shift and the one
investigating the change in business model, i.e. business model innovation, have highlighted
the challenges companies have to face in these transformations. Indeed, companies are subject
to path dependency (Bohnsack et al., 2014). Also, business model innovation is a ‘trial-and-
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error’ process (Sosna et al., 2010), entailing continuous and incremental adjustments. As
mentioned previously, the shift to a circular economy is particularly critical for MNEs, as they
have to change a complex activity system and norms and values across the subsidiaries located
in multiple countries. They have to decide whether and how the transformation to adopt should
be global or local. In order to develop a thorough understanding of the implementation of the
circular economy by MNEs, it is therefore crucial to adopt a longitudinal perspective, which
allows to capture the gradual nature of the transformations adopted.
Thus, in keeping with the importance of the topic and with the limited attention assigned
to it, this study aims to answer the following research question:
How do multinational enterprises in the FMCG-industry integrate the circular
logic into their business model over time?
In order to answer the research question, the study will adopt a multiple case study research
design. The cases will be represented by four multinational companies operating in the FMCG-
industry: Unilever, Coca-Cola Company, Nestlè, and Danone. FMCG-industry is in
particularly important because population growth places a strain on the world’s natural
resources, the raw materials that the FMCG-industry relies on to make its products. These
products are daily consumed by billions of customers across the world, making it one of the
most influential industries. The four chosen multinationals are key players in this industry, they
recognize the damage its operations have on natural resources and the need for a new economic
system.
"The concept of a circular economy promises a way out. Here products do not quickly
become waste, but are reused to extract their maximum value before safely and productively
returning to the biosphere. Most importantly for business leaders, such an economy can
deliver growth. Innovative product designers and business leaders are already venturing into
this space." – Paul Polman, CEO, Unilever
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These companies have sufficient archival data available to fully analyze their process
of integrating the circular logic into the business model. The qualitative data, specifically
archival data, is collected from the documentations released by the company, i.e. sustainability
reports and press releases.
Theoretically, the study aims to make a contribution to the field of sustainable business
model innovation as it provides an overview of how businesses can alleviate its environmental
footprint by changing its logics. It will explore the shift from a linear to a circular logic, during
the integration of the circular economy. It will identify patterns and implications of the process,
that will be generalizable for MNEs in the same industry. Research is limited on how the
circular economy is integrated across subsidiaries in multiple countries, so by focusing on
MNEs this study also aims to make a contribution to the field of international management. It
offers a deeper understanding of how the circular logic is integrated into a more complex
activity system. Simultaneously, this study adds to the current literature on institutional logics
by assessing the transition towards the circular logic of organizations that already face potential
heterogeneity in institutional logics. The empirical research will be practically relevant for
practice for managers and policy makers. Ultimately the goal of this study is to improve the
design, implementation, and performance of a closed-loop economy in the sustainable business
model in theory and practice.
First, the main concepts are discussed and the research gap will be explained in the third
chapter. The first paragraph will discuss institutional logics to create a better understanding of
the values, beliefs and material practices of institutions. The following paragraph will discuss
institutional change, specifically the transition from a linear logic to a circular logic. This
transition does not only require a change in the institutional logics, but it also changes a
businesses’ activity system. Therefore, the last paragraph will discuss the Business Model
(BM) and the sustainable-oriented Business Model Innovation (BMI). The fourth chapter will
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present the theoretical framework and the propositions. Subsequently, the fifth chapter will
discuss and elaborate the research design, case selection, data collection, and data analysis.
Based on the data analysis chapter 6 will present the results in a within-case analysis for each
company, followed by a cross-case analysis that includes all cases. Chapter 7 will discuss the
significance of the findings, the theoretical and managerial contributions, and the limitations
and avenues for future research. The last chapter will present the conclusion of this study.
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3. Literature Review In the following sections the core concepts examined in this research will be discussed and
illustrated. More specifically, the first section will introduce the construct of institutional
logics. The following section will discuss the institutional change consisting in the transition
from a linear logic to a circular logic. Next, the business model and the sustainable-oriented
business model innovations will be explained. The last section will elaborate on MNEs and
sustainable business model innovations.
3.1. Institutional Logics
The construct of institutional logics is one of the core components of institutional theory and
was conceptualized in 1985 by Alford & Friedland. Its purpose was to describe the
contradictory beliefs and practices inherent in the institutions of modern western societies. In
1991, Friedland & Alford extended the definition with the idea of exploring the
interrelationships between society, individuals, and organizations. Based on the definition of
institutional logics by Friedland & Alford (1991), Thornton & Ocasio (1999, p. 804) further
developed the concept of institutional logics by defining them as “the socially constructed,
historical patterns of material practices, assumptions, values, beliefs, and rules by which
individuals produce and reproduce their material subsistence, organize time and space, and
provide meaning to their social reality”.
Institutional logics are the basis of taken-for-granted rules guiding the behavior of field-
level actors, and they refer to the belief systems and related practices that predominate in an
organizational field (Scott, 2001). Reay & Hinings (2009) claim that logics are an important
theoretical construct as they help to explain connections that create a sense of common purpose
and unity within an organizational field. They argue that logics also play an important role
because a change in the field’s dominant logic is fundamental to institutional change.
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Over the last decades, the construct of institutional logics has increasingly been adopted
by management scholars to investigate firms’ behavior, indicating that companies’ activities
can be driven by multiple and diverse institutional logics. A relevant stream of research has
explored the institutional change that consists of the shift in the logic driving organizational
practices. For example, Thornton (2002) has explored how firms shift from an editorial logic
to a market logic. She explains how the differences between these logics showed a decrease in
the importance of professional determinants of organization structure and an increase in the
salience of its market determinants. She claims that the change in logic can be understood as
the movement of publishing houses from one institutional sector to another. Firms that embody
old organizational forms under old institutional logics are relatively immune from change
pressures, until the prevailing institutional logic changes. So when a shift to a new logic occurs,
firms that are embodied in the old organizational forms become deviants that are particularly
vulnerable to change pressures. Therefore, it can be expected that the emergence of the circular
logic creates changes pressures of which firms operating the linear logic are vulnerable to.
Faulconbridge & Muzio (2015) claim that as they operate across multiple and diverse
institutional contexts, MNEs are inevitably exposed to competing and potentially incompatible
institutional pressures, and therefore to experiences of complexity. This requires different
logics and can create different implications. They have the need to reconcile the different the
logics of home and host country. Scholars have highlighted that due to institutional complexity
the change in logics face barriers. Reay & Hinings (2005) argue that actors hold values and
beliefs that are consistent with a certain institutional logic. Since organizational fields are
composed of actors who make up communities, and are characterized by the interactions
between actors, logics, structure, and political factors are all important to field level change.
Within communities, actors can hold different institutional logics, and all fields can be
characterized by competing institutional logics to some degree. When a dominant institutional
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logic exists, it is because other logics are subordinate. Consequently, this process of moving
from one dominant logic to another requires time and actors using their power accomplish such
shifts. Lok (2010) argues that over time, new organizations (e.g. Ellen MacArthur Foundation)
enter fields, introducing new ideas to the market. Changes in social circumstances can enable
subordinated interests to successfully install and mobilize a new logic or reprioritize existing
ones. Over a longer period of time, institutional complexity unfolds, creating different
circumstances to which organizations must respond.
In the next section a specific type of institutional change is discussed; the transition
from a linear to a circular logic.
3.2. Institutional change as shift from a linear to circular logic The term linear economy has become popular in use, as the antonym of the circular economy,
by those writing about the circular economy and related concepts (Murray et al., 2015). The
norms and values of today’s linear logic, known as the ‘make-dispose-waste’ economic model,
is based on large quantities of cheap and easily accessible materials and energy. A linear
economy is defined by converting natural resources into waste, via production. Such
production of waste leads to the deterioration of the environment in two different ways: by the
removal of natural capital from the environment and the reduction of the value of natural capital
caused by pollution from waste. Also during the resource acquisition stage, pollution can occur
(Murray et al., 2015). After the use period, the product will partly become waste and the buyer
decides whether to dispose it. The optimization of generated waste or used raw materials is not
specifically addressed in the product’s technical specifications (Witjes & Lozena, 2016).
According to Stahel (2016), the linear economy aims to be efficient at overcoming
scarcity, but profligates at using resources in often saturated markets. It has been the heart of
industrial development and has generated an unprecedented level of growth, however, it is
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reaching its physical limits. The world’s key resources, as rare earth metals and minerals, are
diminishing. As a result, the costs of material extraction and exploration are rising. This has
drawn the attention of policy makers and business leader and forced them to rethink the use of
materials and energy (Ellen McArthur Foundation, 2015). Scholars and practitioners have
acknowledged the need for change in the economic logic that drives business and more widely
in society. According to Pearce & Turner (1990), are resource deficiency and product waste
typical characteristics of the linear economy. They argue that in order to address this issues it
is necessary to adopt a circular logic, where waste is considered a resource and resources have
to be maintained within the system. The time is right, many argue, to take advantage of the
potential benefits of the circular economy. The need for a new economic model is increasing
as population growth places a strain on the world’s natural resources, and the new possibilities
in technology and social factors have enabled the transition towards a circular economy.
The concept of Circular Economy, inspired by Swedish and German loop-closing, was
first introduced in China by Zhu (1998), and in 2002 it got officially accepted by the by the
Chinese central government. This new strategy is aiming to enable rapid economic growth and
counteract the shortage of raw materials and energy (Su & Zhou, 2005). Over the last years,
support for the circular economy has emerged, and the application of this concept has also been
seen in western economies. According to Hill (2015), the circular economy started as a
theoretical construct but is now gradually becoming an idea accepted by some policymakers
and businesses within Europe as conveying an aspiration to keep resources in economic use
for as long as possible. Since 2009, the Ellen MacArthur Foundation, a leading proponent
founded by the round-the-world yachtswoman, has been promoting the idea of circular logic
to manufacturers and policymakers. The EU Horizon 2020 program and the Swedish
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Foundation for Strategic Environmental Research published their first call for circular
economy proposals in 2014.
However, there is still a lack of agreement on definitions of the circular economy.
According to Murray et al. (2015), the circular logic is defined by having no net effect on the
environment; rather it restores any damage done in resource acquisition while ensuring little
waste is generated throughout the production process and in the life history of the product. By
increasing a product lifecycle through better manufacturing and maintenance, the rate of
product replacement decreases, thus resource use is reduced. This is how the ‘waste-as-food
concept’, wherein unwanted outputs of one industrial process are used as raw materials in
another industrial process, and the three Rs of Reduce, Reuse, and Recycle have become central
concepts to the circular economy.
Literature has been discussing what the components are of the circular logic. The
European Commission submitted a Circular Economy Package to the European Parliament in
December 2015. It identified four sources of economic and sustainable value creation within a
circular economy: the power of inner circle (less cost production); the power of circling longer
(lengthening lifetime of products); the power of cascading use (waste-is-food); and the power
of pure circles (where source materials remains uncontaminated, and therefore improving
redistribution efficiency and material productivity) (Ellen MacArthur Foundation, 2012).
Stahel (2016, p. 1) claims “the circular economy would change economic logic because it
replaces production with sufficiency: reuse what you can, recycle what cannot be reused,
repair what is broken, remanufacture what cannot be repaired”. He argues that organization
integrating the circular economy can be divided into two groups: the first group supports reuse
and extended life service through repair, upgrades, remanufacture and retrofits; and the second
group that turns old groups into as-new resources by recycling the materials. He says that these
forms of circular economy create the need for new skilled jobs in remanufacturing old goods,
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buildings, and infrastructure. However, since it is a fairly new concept, lack of unfamiliarity
slows down the process of adoption to circular logic. Stahel (2016) claims that the idea of
creating wealth by extending product lifecycle is the opposite of economist’s idea of creating
wealth. Promoters of the circular economy have argued that it is valuable both from a
sustainability and from an economic perspective. Indeed, the widely acknowledged definition
of sustainable development is the closed flow of materials and use of energy and raw materials
in multiple phases (Yuan et al., 2008). The principles, norms, values, and material practices of
both the linear and circular logic are highlighted in table 1.
Circular activities of multinationals are hardly investigated. To be able to succeed in
integrating the circular economy, MNEs have to adapt their business model to one wherein
planning, resourcing, procurement, production and reprocessing are designed and managed, as
both process and output, to maximize ecosystem functioning and human well-being (Murray
et al., 2015). A change in logic will not only lead to a change in norms and beliefs, it also leads
to an important change in material practices of a company. These practices can be found in the
design of a firm’s business model. MNEs who are integrating the circular logic into their
business model, have to implement these changes in multiple countries, requiring a more
complex ‘activity system’ (Zott & Amit, 2010). This is particularly interesting because of
potential heterogeneity in institutional environments. To create a full understanding of
sustainable business models the following section will discuss the business model and the
sustainability-oriented business model innovation.
Linear logic Circular logic Principles, norms, and values
Based on large quantities of cheap and easily accessible materials and energy. Efficient at overcoming scarcity.
Waste is considered as a resource and have to be maintained within the system. It should have no net effect on the environment.
Material practices
Make-dispose-waste. Reduce, reuse, and recycle.
Table 1: The linear vs. circular logic
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3.3. Business Model and Sustainability-Oriented Business Model Innovation
Business model (BM) and business model innovation (BMI) have received significant attention
in industry and management literature. It has been increasingly suggested that business model
innovation is a key to business success (Chesbrough, 2010; Lüdeke-Freund, 2010; Zott et al.
2011). Bellman et al. (1957, p. 474) were the first to mention the term “business model” in an
academic article, defining it as “a representation of reality, a simulation of the real world
through a model”. However, the number of articles on business models remained low until the
1990s, when the use of the term increased due to information and communication technologies
(ICT) and internet companies. Nowadays, the term ‘business model’ is often misinterpreted
and misused, and has consequently been inadequately understood and applied by both scholars
and practitioners (DaSilva & Trkman, 2013).
According to Zott et al. (2011), researchers have begun to converge on the following
common themes that characterize business models: (a) business models center on the logic of
how value is created for all stakeholders, not just how it is captured by the focal firm; (b)
activities performed by the focal firm as well as by partners, suppliers, and even customers
play an important role; (c) business models emphasize a system-level, holistic approach toward
explaining how firms “do business”; and (d) the business model is emerging as a new level and
unit of analysis. A subject of debate among scholars has been the components of a business
model. According to DaSilva & Trkman (2013), a business model does not give strategists all
the answers for how to operate a business and generate a sustainable competitive advantage.
Instead, it creates an image of the company and shows how the various elements of the business
work together at a certain moment in time. Zott & Amit (2010) created a conceptual toolkit
that enables entrepreneurial managers to design their future business models. They argue that
an activity in a focal firm’s business model can be viewed as the engagement of human,
physical and/or capital resources of any party to the business model to serve a specific purpose
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towards the fulfillment of the overall objective. They discuss that one set of important design
parameters that characterize this activity system are the design elements of ‘content’,
‘structure’ and ‘governance’, which go beyond interdependencies among activities or notions
of network structure. These elements can be used to identify different categories of BMs related
to the circular logic.
- Activity system content refers to the selection of activities, i.e., those that are performed.
For example, a firm can adopt waste collecting activities to achieve a closed loop
system.
- Activity system structure describes how the activities are linked, and it also captures
their importance for the business model, i.e., in terms of their core, supporting or
peripheral nature. When a firm makes the transition from a linear to a circular logic it
has to change its core and peripheral activities. For example, it has to change new
activities in product development and manufacturing.
- Activity system governance refers to who performs the activities. To integrate the
circular logic, it is likely that the firm has to collaborate with partners outside its original
value chain.
For simplicity and conceptual clarity, they described the design parameters of activity
systems as independent and ethical, but they could also be highly interdependent.
With the increasing pressure of competition and institutional changes, organizations
have to constantly be innovative to keep their position in the market, this is where BMI enters
the strategic plan. Zott & Amit (2010, p.1) define BMI as “a tool for entrepreneurs and general
managers to create and appropriate value, especially during an economic change”. They claim
that BMI consists in creating a new or adjusting an existing activity system by recombining
resources of a firm and its partners. Entrepreneurs and managers should be focused on BMI for
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several reasons. Firstly, it creates a source of value for future businesses. Secondly, by
executing a BMI which competitors find hard to imitate, a company is able to create a
competitive advantage. And as last, because BMI is a competitive powerful tool, managers and
entrepreneurs have to be able to analyze the competitors’ efforts in this area. Companies face
a number of barriers when innovating their BM. According to Chesbrough (2010), companies
need an effective attitude towards business model experimentation. Companies trying to
change their business models are highly likely to fail by experimenting with different business
models until the right one is found. Business model innovation is a trial-and-error process
(Sosna et al., 2010) entailing continuous and incremental adjustments. Furthermore,
Chesbrough (2010) argues that companies need to identify the right internal leaders for a
business model to change. These leaders need to manage the results of the processes of BMI
and deliver a new and better business model for the company. Moreover, the culture of the
organization has to learn to embrace the new model, while keeping the effectiveness of the
current business model until the new one can be taken over completely.
Companies are subject to path dependency; the idea that path events guide future action
and history matters, which also implies a persistence in decision-making patterns over time
(Sydow et al., 2009). Large companies, according to Helfat & Lieberman (2002), have vast
resources that provide a wide variety of starting points for business model innovation and allow
experimentation with multiple business models simultaneously (Doz & Kosonen, 2010). This
increases the chance of adopting a business model that will become the standard eventually
(Bayus & Agarwal, 2007). Therefore, the transformation of the business model can take much
longer as there is no need to make a definite choice right away, which leads to a greater
diversity in business models over a prolonged period (Bohnsack et al., 2014).
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Nowadays, within the research exploring BMI, increasing attention has been assigned
to sustainability-oriented BMI. In line with the circular economy, Kortmann & Piller (2016)
have developed a framework of SBMs involving a closed-loop value chain. They argue that a
holistic perspective is driving the emergence of a closed-loop value chain and requires
managers to design, control, and operate a system maximizing value creation over the entire
lifecycle of a product, striving to dynamically recover value from different types of returns
over time. They conceptualize this by means of three consecutive stages in an extended product
lifecycle, comprising the production stage, the consumption stage, and the subsequent
circulation stage. Firms need to develop competitive and integrated business models that extend
the traditional production function, include service offerings in the consumption stage, and
emphasize the circulation or recovery of distributed products. Bocken et al. (2014, p. 44) define
BMIs for sustainability as “innovation that create significant positive and/or significantly
reduced negative impact on the environment and/or society, through changes in the way the
organization and its value-network create, deliver value and capture value or change their value
propositions”.
Due to rising pressures, collaborations between firms and other key stakeholders are
becoming more important (Lowitt, 2013). The approach of system thinking and the need to
consider a business entity as an element of a wider system of stakeholders and the environment
in which it operates has been long discussed in the business literature (Mason & Mitroff, 1981;
Pauchant & Mitroff, 1990; Hester & Adams, 2014). As Zott & Amit (2010) mentioned, a
business model is geared toward total value creation for all parties involved. It lays the
foundation for the focal firm’s value capture by co-defining the overall ‘size of the value pie’,
which can be considered the upper limit of the firm’s value capture potential. Bocken et al.
(2014) claim that a sustainable business model (SBM) incorporates a triple bottom line
approach and consider a wide range of stakeholder interests, including society and
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environment. SBMs are important in driving and implementing corporate innovation for
sustainability, can help embed sustainability into business purpose and processes, and serve as
a key driver of competitive advantage. Kortmann & Piller (2016) argue that, nowadays, the
integration of external partners into the new product or service development process has
become almost a routine activity for many organizations. They conceptualize the firm as a
system of interdependent and transcending activities that span internal and external firm
boundaries and enable the creation and capture of value in concert with external partners.
Firms increasingly seek to identify opportunities to gain a competitive advantage in a
world characterized by tightening regulation, resource supplies, climate change effect, and
shifting social pressures (Bocken et al., 2014). Due to the resource scarcity, one of the most
recent types of SBM is the one integrating the circular logic. However, it appears that limited
attention has been given to the integration of circular economy principles in the BM across
multiple institutional environments. As mentioned before, in particular, for large, multinational
companies, given their visibility, the commitment to a circular model is increasingly crucial
for their legitimacy and it may also be financially profitable, but, at the same time, it represents
a critical challenge, due their complex ‘activity system’ (Zott & Amit, 2010).
3.4. MNEs and (sustainability-oriented) business model innovation For all companies, reconfiguring the existing business model is a challenging process. It is
however particularly demanding for MNEs, which need to implement the business model
innovation across their complex, international ‘activity system’ and they need to decide to what
extent and how to implement it across the multiple locations in which they operate (Zott &
Amit, 2010).
Sustainability-oriented BMI is a core necessity for MNEs, due to the strong impact their
businesses have on the environment and on the society and due to the higher pressures they
face from multiple stakeholders (Zott & Amit, 2010). Yet, although MNEs represent a unique
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context to examine (sustainability-oriented) BMI, to the author’s knowledge extant literature
has given very scant attention to this topic. Some studies, e.g. Bohnsack et al. (2014) examine
MNEs, but take a ‘monolithic’ approach to their sustainability-oriented BMI and do not take
into consideration the international nature of their activities and the challenges they face due
to this. Other studies (e.g. Sosna et al. 2010) address international expansion as a way to scale
the BMI, but not as a pre-existing condition of the company.
To have a thorough understanding of a MNE’s BMI, it is instead crucial to adopt an
international perspective to the study of the change in the BM components. This consists for
example in examining to what extent the transformation of MNE’s activity system content
occurs globally or in defined locations, whether and how the change in the activity system
governance relies on the involvement of global and/or local partners, how the change to the
international network of the MNE’s activities unravels over time.
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4. Theoretical Framework In the last year, both scholars and practitioners have increasingly agreed on the need to rethink
the use of resources and energy (Stahel 2016; Ellen McArthur Foundation, 2015; Murray et al.,
2015). The widespread call for a closed-loop production system has triggered an increase in
interest among researchers for the study of the circular economy. As mentioned in the previous
sections, a signal of this is represented by the call for papers on the circular economy by the
California Management Review. Yet, research on the circular economy among management
scholars has focused on its origins and conceptualization (Kortmann & Piller, 2016; Murray et
al, 2015), overlooking the process of transformation towards a circular economy. Also, scholars
have given very scant attention to the adoption of an international perspective to the
investigation of firms’ transition towards circularity. For MNEs the transition towards a
circular economy is particularly important for two main reasons. First, MNEs due to the size,
are primary actors in the supply and transformation of materials and resources. Since the
world’s key resources are diminishing, and costs of materials extraction and exploration are
rising, pressures from multiple stakeholders are increasing in favor of a shift from linear to a
circular system. Second, due to their presence in multiple countries, MNEs face critical
challenges in the change of norms, values and materials practices towards circularity. Turning
their complex, international ‘activity system’ (Zott & Amit, 2010) into a circular one requires
time and significant efforts.
This is even more critical when confronted to what is stressed both by the literature on
the shift in institutional logics and on business model innovation. These two streams of research
highlight the difficulties and the gradual nature of these transformation processes. Path
dependency (Bohnsack et al., 2015), the need for a trial-and-error approach (Sosna et al., 2010),
the importance of keeping the effectiveness of the current business model until the new one
can be taken over (Chesbrough, 2010) are core features of these processes. Logics are important
within an organizational field and play a role in institutional change. The process of moving
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from one dominant logic to another involves actors using their power to accomplish such shifts
(Reay & Hinings, 2005).
Given the absence of research that focuses on the transformation of MNEs towards the
circular economy and the need to adopt a longitudinal approach to gain a thorough
understanding of the transformation in institutional logics and BM, this study aims to answer
the following research question:
“How do multinational enterprises in the FMCG-industry integrate the
circular logic into their business model over time?”
Drawing on Zott & Amit’s (2010)’s categorization of the BM component, the study focuses on
examining how the circular logic has been integrated into the MNEs’ activity system content
and activity system governance from a longitudinal perspective. Given the international
presence of the MNE, the study will examine whether the changes have been implemented at
a local, regional, and/or global level. More specifically, with regard to the activity system
content, I expect that MNEs take a holistic perspective when integrating the circular logic into
the product lifecycle. Firms need to develop competitive and integrated business models that
extend the traditional production function, include service offerings in the consumption stage,
and emphasize the circulation or recovery of distributed products (Kortmann & Piller, 2016).
Murray et al. (2015) agree with this theory by arguing that increasing product lifecycle through
better manufacturing and maintenance, the rate of product replacement decreases, thus resource
use will be reduced. The three Rs of Murray et al. (2015) of Reduce, Reuse, and Recycle can,
therefore, be related to the production function stage, consumption stage, and subsequent
cycling stage respectively. The three stages and the three Rs form the four sources of the
circular economy identified by the Ellen MacArthur Foundation (2012); the power of inner
circle, the power of circling longer, the power of cascading use, and the power of pure circles.
Because recyclable package designs are needed in order to recycle the products, it is expected
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that MNEs are likely to first integrate the circular logic in the production stage before focusing
on the consumption stage and the subsequent circulation stage.
Proposition 1: over time MNEs are likely to start integrating the circular logic in the
beginning of the product lifecycle, and then extend it to the end of the product lifecycle.
Secondly, as regards the activity system content, I expect that the MNEs initially focus
on recycling activities. According to Pearce & Turner (1990), a closed-loop value chain should
consider waste as a resource and resources should be maintained within the system. Resource
cycling is fundamental to the circular economy since it is part of the reversed value chain and
embraces all firm activities from product returns to the potential recovery of the products
maximum value via recycling and up-cycling activities (Kortmann & Piller, 2016). Upcycling
and downcycling activities are strongly related to the third and fourth source of the circular
economy; the power of cascading use (waste-is-food) and the power of pure circles (Ellen
MacArthur Foundation, 2012). Downcycling refers to the recycling process of converting
materials into new materials of lesser quality and reduced functionality, whereas upcycling
processes converts materials into new materials of higher quality and increased functionality
(Ellen MacArthur Foundation, 2013). Since upcycling is a more complex and costly process,
MNEs are likely to initially adopt downcycling activities and then move to adoption of
upcycling activities.
Proposition 2: over time MNEs are likely to initially adopt downcycling activities and
then integrate upcycling activities.
As regards the activity system governance, I expect that over time the MNEs establish
increasingly partnerships outside their ‘traditional’ value chain. Nowadays, integrating external
partners into the new product or service development process has become almost a routine
activity for many organizations (Kortmann & Piller, 2016). This is also consistent with the idea
of “system thinking” that has been associated with the circular economy (Pauchant & Mitroff,
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1990; Mason & Mitroff, 1981; Hester & Adams, 2014). Since circular activities often involve
technologies and processes that might be unfamiliar to the MNE’s current business model, it is
expected that over time MNEs establish partnerships with external actors that have the
authority or technology to develop these circular activities.
Proposition 3: over time MNEs are likely to increasingly establish partnerships outside
their ‘traditional’ value chain.
The last proposition regarding the geographic scope is related to the scale on which the
activities regarding the circular logic are practiced. Given a MNE’s visibility, the commitment
to the circular logic throughout the whole business model is crucial for their legitimacy (Zott
& Amit, 2010). MNEs operate across multiple and diverse institutional contexts, thus face
different logics that can lead to different implications (Faulconbridge & Muzio, 2015), which
makes experimentation crucial to business model innovation (Chesbrough, 2010). Therefore, I
expect that MNEs initially perform circular activities on a local scale, and then extend it to a
global scale.
Proposition 4: over time MNEs are likely to integrate the circular logic on a local scale
then extend it to a global scale.
It is expected that closed-loop business models will have a foundation based on reduce,
reuse, and recycle. The lifecycle of the companies’ products increases through better
manufacturing and maintenance, which leads to the result of resource use reduced because of
a decrease in the rate of product replacement (Murray et al., 2015). It is expected that these
MNEs faced barriers that when making the transition towards a circular logic. The reason for
this is because firms that embody old organizational forms under old institutional logics are
relatively immune until the prevailing logic changes (Thornton, 2002).
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5. Methodology
5.1. Research Design This exploratory research aims to analyze and understand how multinationals integrate a
circular logic in the business model. A multiple case study design is adopted in order to answer
the research question. According to Yin (2013) a case study method is a preferred method
when; (a) “how” or “why” questions are being posed, (b) the investigator has little to no control
over events, and (c) the focus is on a contemporary phenomenon. These characteristics
correspond to the research conducted in this thesis. By adopting a longitudinal case study this
research aims to answer questions such as: “how do MNEs operate a circular economy?”, “what
patterns can be discovered?”, “what are the main changes in the BM when integrating the
circular logic?”, and “what actors are needed to integrate the circular logic?”. The conclusions
that answer these questions are drawn carefully because these answers are only tentative
(Saunders and Lewis, 2012). Yin (2013) argues that a multiple case study design has two
rationales. Each case must be carefully selected so that it either (a) predicts similar results
(literal replication) or (b) predicts contrasting results but for anticipatable reasons (theoretical
replication). Since it is expected to discover similar patterns for each case, this study is based
on the rational of literal replication. Yin (2013) also claims that a few cases, no more than 4,
can be used to base a study on literal replication. Therefore, this study will focus primarily on
4 cases.
5.2. Case Selection The cases will be represented by 4 multinational companies operating in the FMCG-industry
specified in table 2: Unilever, Coca-Cola Company, Nestlé, and Danone; The FMCG-industry
is one of the most powerful industries since it supplies a substantial portion of the world’s daily
consumed products. Fast-moving consumer goods account for 35 per cent of material inputs
into the economy, a significant part of total consumer spending on tangible goods, and 75 per
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cent of municipal waste. Moreover, the consumer goods sector uses more than 90 per cent of
agricultural output, possibly the most embattled resource in the future (Ellen MacArthur
Foundation, 2013). Altogether, the FMCG-industry is pressured to look for a new economic
model to alleviate its environmental footprint. The companies representing the cases were
selected for a number of reasons.
First, the four chosen multinationals are one of the main key players in the FMCG-
industry that focus on the same type of sustainable business model innovation; the integration
of the circular logic. According to Statista (2015), the selected companies belong among the
top 15 FMCG companies based on net sales in US dollars. These 4 companies were selected
out of the 15 because of a number of reasons. First, the selected companies have in common
that they are all operating in the food and drinks industry which is, according to the European
Commission is responsible for 23% of global resource use (Euractiv, 2012). The food industry
faces many significant risks from public criticism of corporate social responsibility issues in
the supply chain (Maloni & Brown, 2006), therefore Unilever, Nestlé, and Danone were
examined. Coca-Cola Company, the world’s largest beverage company (Jones, 2013), is the
only company among the cases that solely operates in the beverage industry. However, it is
still a valuable case to include in this research as it generates a significant amount of plastic
waste. The current plastic economy has drawbacks that are becoming more apparent each day,
this makes it one of the main issues the circular economy is focusing on. After a short use, 95
per cent of plastic packaging material value is lost to the economy. A shocking 32% of plastic
packaging does not end in the collection systems, generating significant economic costs by
damaging the productivity of vital natural systems. As the world’s largest beverage company
Coca-Cola is a key player in the plastic packaging industry. One of the core proposals of the
Ellen MacArthur Foundation (2014) is inspired by polyethylene terephthalate (PET) in plastic
packaging that was first introduced in 1973. Coca-Cola Company has introduced PET material
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in the production of plastic beverage bottles in the late 1970s, setting an example for many
other companies in the FMCG-industry (Ellen MacArthur Foundation, 2014), including the
other 4 companies representing the cases in this study. Nowadays, PET is also used for many
other consumer products, not just beverages.
Second, the 4 MNEs are committed to actively promote the circular economy in their
practices, on their website, and in press releases. Unilever and Danone both joined the Ellen
MacArthur Foundation as Global Partner. Coca-Cola Company and Nespresso, an operating
unit of Nestlé, are member of the Circular Economy 100 Initiative (CE 100); a global platform
led by the Ellen MacArthur Foundation bringing together leading companies to support the
circular economy.
Third, it is particularly important to examine MNEs because of the following reasons.
MNEs operate on a global scale that makes their operations more visible to the consumers,
which makes it more urgent for them adapt a sustainable business model otherwise it may affect
their legitimacy. Due to the size, they are primary actors in the supply and transformation of
materials and resources. Since the world’s key resources are diminishing, and costs of materials
extraction and exploration are rising, pressures from multiple stakeholders are increasing in
favor of a shift from linear to a circular system. Furthermore, because of their presence in
multiple countries, MNEs face critical challenges in the change of norms, values and materials
practices towards circularity. Turning their complex, international ‘activity system’ (Zott &
Amit, 2010) into a circular one requires time and significant efforts. Literature is limited on
how MNEs integrate the circular logic, therefore it is valuable that the companies representing
the cases have an international orientation.
Unilever Nestlé Danone Coca-Cola Company
Founded in 1930 1905 1919 1886
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Headquarter location
Rotterdam, the Netherlands & London, United Kingdom
Vevey, Vaud, Switzerland
Paris, France Atlanta, Georgia, United States of America
Core products Food, beverages, cleaning agents, and personal care products
Food and beverages
Fresh airy products, waters, early life nutrition, medical nutrition
Beverages
# brands 400 2,000 unknown 500 # countries it operates in
190 189 130 200
Net sales in US Dollars
59,145 million 92,361 million 44,294 million 23,113 million
Table 2: Company specific information
5.3. Data Collection This study is based on secondary data and specifically focuses on the analysis of archival data.
The data will be collected from annual reports, sustainability reports, press releases, and other
corporate documentations released by the company itself. The data sources do not include
interviews with individuals, since the main interest was understanding the change in logics for
each company. According to Reay & Hinings (2005), if there is enough data to conduct the
research, the analysis of archival data should be enough. The data shows the prevalence of the
publicly accessible communications in the FMCG-industry, which provide insights into the
change process of a firm. Since this data is created by the company itself, this data is useful to
create a full inside knowledge of its operations and how it integrates the circular logic. These
documents represent the end result of decisions and negotiations made within the company.
Furthermore, the methods of using archival data also have an advantage when the research goal
is to be predictive of certain outcomes (Yin, 2013), thus is suitable for researching propositions.
Annual reports are analyzed because they form a comprehensive report of a firm’s
audited accounts for the preceding year, as required in corporate legislation. Sustainability
reports form the majority of the analyzed data in this research because it presents the economic,
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environmental, and social impacts of a firm’s everyday activities. It presents the firm’s values
and governance mode and discusses the firm’s strategy and its commitment to a sustainable
global economy. The press releases included in the data collection consist mostly out of news
releases or statements written by the company itself that are formatted for public consumption.
Other corporate documentations used in the data analysis include documents such as strategic
reports and Global Reporting Initiative (GRI) reports. The number of corporate documentations
collected and analyzed can be found in table 3.
Unilever Nestlé Danone Coca-Cola Company
Annual Reports 6 6 6 6
Sustainability Reports 6 6 5 6
Press Releases 7 19 5 8
Other corporate documentations 5 1 6 3
Total 24 32 22 23
Table 3: Overview of data collection
The collected data will originate between 2010, the first full year that the circular economy was
supported by the Ellen MacArthur Foundation, and 2015, the most recent year from which
similar corporate documentations of all cases can be found. This time frame is believed to be
sufficient to observe the emergence of the circular logic in the business models of key players
in the FMCG-industry.
5.4. Data Analysis This study will use a priori approach to analyze the data. The design elements of Zott & Amit’s
(2010) business model design will form the themes for each company to identify activities
within the business model that are part of the circular economy. For each activity the following
parent codes existing out of ‘activity system content’ and ‘activity system governance’ are
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determined. In addition, the activities will be coded based on whether they have been adopted
on a local, regional, or global level. The activity system content codes will have a value chain
orientation in line with the holistic perspective of Kortmann & Piller (2016) in order to answer
the first proposition with regard to the positioning of the circular activities in the product
lifecycle. The stages will include all three Rs of Reducing, Reusing, and Recycling identified
by Murray et al. (2015) that are central to the concept of the circular economy. The codes
‘innovation’ and ‘reducing’ are linked to the early stages of the value chain and represents the
production function stage of the closed-loop value chain. In this stage, the traditional
production function is extended. Innovative activities are expected to improve product
packaging and reducing activities are expected to decrease the amount of generated waste or
materials used during production. The code ‘reusing’ is linked to the consumption stage, where
it includes service offerings to encourage consumers to reuse a particular product of when the
company itself reuses materials or sources. The production and consumption stage aim to
increase products lifecycle through better manufacturing and maintenance, the rate of product
replacement decreases, thus resource use is reduced (Murray et al., 2015). The codes
‘collecting’ and ‘recycling’ are associated with the subsequent circulation stage. The collecting
activities are referred to as the reversed value chain that embraces all firm activities that
encourage product return and waste collecting behavior. To answer the second proposition, the
‘recycling’ code exists out of 2 subordinate codes; ‘upcycling’, and ‘downcycling’. In this last
stage, the circulation or recovery of distributed products is emphasized. Upcycling activities
refer to the conversion of waste into high-value products, whereas downcycling activities refer
to the conversion of waste into low-value raw materials.
In order to answer the third proposition, the activity system governance codes can be
divided into two groups; actors within the traditional value chain and actors external to the
traditional value chain. The codes ‘internal’, ‘consumers’, ‘suppliers’, and ‘competitors’
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belong to actors within the traditional value chain, whereas ‘NGOs’, ‘government’, and
‘companies in unrelated industries (CUI)’ are external actors. During the data analysis the
‘local community’ code was added, as it appeared that all companies integrated activities that
not necessarily involved its consumers, but local inhabitants or visitors from a specific area.
The last theme regarding the geographic scope is related to the last proposition in
relation to the scale on which the circular activities are performed. The circular activities are
performed on either a local, regional, or global scale. According to Asmussen (2008), local
activities are practiced on a subsidiary level and global activities are initiated by the
headquarters. In this study, regional scale activities are developed in a specific administrative,
area, division, or district, such as the North America or the Amazon Rainforest area.
Last of all, since this study aims to analyze the integration of the circular economy over
time, the data needs to be organized with a longitudinal perspective. Thus, each activity found
in the dataset will be categorized to the year it is initiated in. The themes and corresponding
codes are specified in table 4.
Themes Codes Coding strategy
Activity system content
Innovation Changing packaging designs to save materials, reduce weight, and make it more recyclable
Reducing Reduce waste disposal or material use Reusing A product or elements of the product that
are reused again Collecting Post-consumption activities that include
waste collection Recycling The process of converting waste into new
products, recycling consists out of two subcodes:
- Upcycling: Converting waste into high-value products.
- Downcycling: Converting waste into low-value raw materials.
Creating partnership Joining other organizations in an alliance in order to achieve a collective goal
Internal The activity has exclusively been developed by the respective company
Consumers Individuals who consume products of the respective company
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Activity system
governance
Suppliers A party that supplies goods or services to the respective company
Competitors A company in the same industry that offers similar products
NGOs A non-profit organization that operates independently of any government
Government The system by which a state or community is controlled
Companies in unrelated industries (CUI)
Companies not operating in the FMCG-industry
Local community Inhabitants/visitors of the respective area Geographic Scope
Local Activities developed in one or a few countries (subsidiary level)
Regional Activities developed in a specific administrative area, division, or district
Global Activities developed across the world (headquarter level)
Year
2010 The year in which the activity was initiated in
2011 2012 2013 2014 2015
Table 4: Themes and codes
To analyze and code the unstructured data, the qualitative data analysis software NVivo
was used. NVivo provides a set of tools to assist in undertaking an analysis of qualitative data
by helping to manage data, manage ideas, query data, visualize data, and report from data,
however, it is not able to ensure a bias-free analysis (Bazeley & Jackson, 2013). Therefore, to
ensure the validity strong and clear explanations are given and rival explanations are addressed
(Yin, 2013). In spite of this study having a deductive approach, during the data analysis there
was an open approach for new activities and actors. A case study database was created and the
information was put in chronological order to analyze the activities adopted, the changes in the
business model over time, and to ensure reliability of this research (Garud and Rappa, 1994;
Yin, 2013).
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6. Results The results obtained from data analyzes will be presented in this chapter consisting out of a
within-case-analysis and a cross-analysis. The within-case-analysis will illustrate the results
for each case separately, starting with a summary of the company’s circular activities related
to the propositions. Subsequently, the results will be discussed in chronological order from the
year 2010 to 2015. The data presented in this section has been retrieved from the case study
database that is created for this research.
6.1. Within Case Analysis
6.1.1. Unilever
The results show that the amount of circular activities of Unilever increased over the years and
peaked in the year 2012. Unilever has been active in reducing and recycling activities over the
full period examined. They have also been active in innovating its packaging over the year,
except for the year 2014, in which no data was found of new innovations in packaging. The
results show that Unilever has invested more in activities related to the beginning of the product
lifecycle than activities related to the end of the product lifecycle. More investments were made
in downcycling than upcycling activities, however, the first investments were made in
upcycling activities. When it comes to the activity system governance Unilever has developed
most activities exclusive internally. The activities that involved partnerships with other actors
have been equally developed with actors within and external to the traditional value chain.
However, in 2015, there was a significantly higher amount of activities that involved actors
outside the value chain. The majority of these collaborations exists out of partnerships with
companies in unrelated industries. These were mostly focused on recycling activities and R&D
projects to innovate packaging. Collaborations with governmental organizations were needed
to commence partnerships with other competitors or enable waste collecting activities. The
highest amount of partnerships started in 2015, of which the majority involves collaborations
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with local municipalities for research and waste collecting purposes. In general, the majority
of partnerships over the years involve actors outside Unilever’s traditional value chain. With
regard to the geographic scope, over the examined years, Unilever has always initiated more
circular activities with a global scope than with a local scope. Regional activities were not
common at all. New packaging designs were implemented in markets depending on the
countries in which the product is available in. Most of the improvements in packaging were
made on flag brands, thus implemented on a global scale. The results from the data analysis
for Unilever can be found in table 5. The following paragraphs provide a more detailed
overview of Unilever’s circular activities initiated in 2010-2015.
Unilever’s main circular activities were recycling, reducing and innovating its
packaging. With the data analysis starting in 2010 Unilever’s main circular activity initiated
involved a partnership with retailer Tesco to create consumer awareness about sustainability
and recycling. This program has been implemented in nine markets from the UK to China. This
was also the year that Unilever published its board and packaging sourcing policy. The policy
outlines the company’s goal to source 75 per cent of its paper and board packaging from
sustainably managed forest or from recycled materials by 2015, rising to 100 per cent by 2020.
Furthermore, Unilever changed the packaging of different flag brands to reduce the amount of
material used in each unit, and therefore reduce waste.
In 2011 they continued innovating the packaging of many flag brands both in local as
global products. To create a new design for the Vaseline Petroleum Jelly Jar, Unilever started
a collaboration with Blue Marlin’s New York studio to create a jar that uses less plastic and is
more recyclable. A collaboration with the RecycleBank in the United States aimed to
encourage consumers to recycle.
In 2012 Unilever both focused on the reduction of waste disposed at their
manufacturing sites across the world and the reduction of materials used in packaging. Which
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led to a significant increase in globally initiated activities. Efforts were made to not only reduce
materials used and waste generated during manufacturing, but to also create awareness among
the consumers about waste management. Unilever has appointed packaging mangers dedicated
to increasing recycling and an advocacy manager who will encourage positive change in
government policy on waste.
In 2013 the amount of initiated activities remained high, still focusing on reducing
waste/material but also on innovating packaging. The focus laid on R&D projects to develop
new technologies to create new packaging designs that will lead to waste reduction. An
important innovation was the continuing improvement of Dove packaging design, starting with
the new up-side down deodorant pack in 2010 till the new Dove Body Wash bottles in 2013.
Investments in downcycling factories were made to achieve zero non-hazardous waste disposal
to landfill. Moreover, Unilever launched a research project with the University of Liverpool to
develop the next generation of renewable chemicals from biomass to use in the manufacturing
of its home and personal products.
The year 2014 was the beginning of the official Global Partnership between Unilever
and the Ellen MacArthur Foundation. Another important collaboration was the UK industry
collaboration, the REFLEX Project, which included Nestlé as one of the project partners. The
collaboration aims to remove several barriers to create a circular economy in flexible plastic
packaging that involves the whole supply chain. Furthermore, Unilever has continued reducing
and recycling activities from the year before and launched the ‘Design for Recyclability’
guidelines.
The year of 2015 involved an important milestone for Unilever since they have
achieved to be the world’s first zero to landfill company in Europe, which means that no waste
from Unilever-owned premises, such as factory and offices, goes to landfill in Europe. Similar
to previous years, Unilever continued innovating its packaging by reducing weight and
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materials. Another milestone was achieved when Unilever’s research in India has proved that
pyrolysis technology can convert sachet waste into and industrial fuel through extended
production runs. Based on this we can expect more downcycling projects to be introduced in
the following years, more than that, that year they already placed an order for equipment to
build a pilot plant to prove the commercial viability of this technology. Unilever has also
achieved its goal of the paper and board packaging sourcing policy that was set for 2015. Lastly,
2015 has been the starting point for 2 new partnerships; they partnered with Greenredeem to
encourage people to recycle and live more sustainable, and they brought together over 100
representatives to create a movement for change on zero waste.
Overall, research shows that over time Unilever initiated more activities that were
related to the production stage of the product lifecycle; of which the majority started in the first
3 years of the research period. Consumption stage activities were only found in the middle of
the research period, whereas data shows that recycling activities were initiated in a continuous
pace over time, existing out of more downcycling then upcycling activities. The one upcycling
activity found in the data appeared to be initiated before the downcycling activity. As regards
the activity system governance, it is found that more external than internal actors were involved
in circular activities. During the first half of the research period, Unilever developed more
activities within the value chain, then gradually started to involve more external actors. Finally,
as to the geographic scope, during the research period, Unilever has continuously performed
the majority of its activities on a global scale rather than a local scale. The regional performed
activities were only found in the data once.
Unilever Activity system content 2010 2011 2012 2013 2014 2015 Total Innovating packaging 2 3 2 3 1 11 Reducing 2 3 5 2 2 3 17 Total production stage 4 6 7 5 2 4 28
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Reusing 2 1 3 Total consumption stage 2 1 3 Collecting 1 1 2 Recycling 2 2 4 4 1 4 17 Downcycling 2 1 3 Upcycling 1 1 Total subsequent stage 3 2 4 4 1 5 19 Creating partnership 2 2 4 Total activities 6 8 13 10 5 10 52 Activity system governance Internal 2 2 5 2 3 2 16 Consumers 1 1 2 1 5 Suppliers 1 1 1 1 1 1 6 Competitors 1 1 2 Total actors within 2 2 3 1 2 3 13 NGOs 1 2 2 5 Government 1 1 1 2 5 CUI 1 2 2 3 8 Local community 1 1 2 Total actors outside 2 1 3 3 3 8 20 Geographic scope Local 3 2 1 4 10 Regional 1 1 Global 4 1 7 4 5 3 24
Table 5: Data results Unilever
6.1.2. Nestlé Based on the results it can be seen that Nestlé has been active in all categories of circular
activities during the examined time frame. The amount of circular activities was increasing
significantly from 2012 and onwards. Even though it is known that Nestlé’s operating unit
Nespresso has joined the CE100 initiative, no data was found on when this collaboration
started. With regard to the activity system content, Nestlé has initiated more circular activities
related to the subsequent circulation stage. They have significantly been active in recycling
activities that included a similar amount of down- and upcycling activities. It should be noted
that during the research period, Nestlé first invested in an upcycling activity before investing
in downcycling activities. With regard to the activity system governance, Nestlé has developed
the majority of its circular activities with actors external to the traditional value chain. The
majority of the activities within the traditional value chain were developed exclusively by the
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company itself. They have partnered with companies in unrelated industries mostly for R&D
investments and innovations in packaging. Partnerships with recycling banks and local
municipalities were initiated to roll out more recycling programs in new markets, install more
Nespresso capsule collecting points, and home collection services. Furthermore, it appears to
be uncommon for Nestlé to develop activities that include competitors. The only activity found
that involved a competitor was the UK collaboration the RESEARCH Project, which included
Unilever as a project partner. With regard to the geographic scope, it appears that Nestlé has
equally performed their circular activities on a local and global scope throughout the years. It
was uncommon to operate circular activities on a regional scale. The majority of the local
activities involve investments made in local factories that are either opening up or
implementing a new system. If these new systems turn out to be effective, Nestlé shows
initiative to replicate the process in other locations in different countries. Most global initiated
activities were related to innovations in packaging for flagship brands that are available in
multiple countries. The results from the data analysis for Nestlé can be found in table 6.
Starting in 2010, Nestlé made an investment in the Cagayan de Oro Nescafé factory in
the Philippines. This factory uses a state-of-art boiler to recycle and burn spent coffee grounds
and other biomass. That same year, they launched the Special.T in France, a specialized tea
machine that produces tea using recyclable aluminum capsules that contain tea leaves. These
aluminum capsules can be collected through the same national recycling collection points
system as the Nespresso coffee cups. In the following years, Nestlé introduced Special.T in
other European markets.
In 2011, Quantis, a sustainability and lifecycle assessment consulting company, has
conducted a study that showed that the Nespresso aluminum capsule, that is recycled after use,
is the option with the best overall environmental impact. They have also developed a “cascade
system” at the Nestlé Waters San Pellegrino plant, which allows them to reuse water for rinsing
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and washing of bottles. Furthermore, in a joint venture between Nestlé and General Mills,
known as Cereal Partners Worldwide, a leading example of sustainable design was set. They
have constructed an environmentally friendly building of which more than half the building
was constructed using locally-sourced recycled materials. It was the first time a Swiss building
has obtained the highest level of certification the United States Green Building Council award
to recognize leadership in energy and environmental design (LEED).
In 2012, the number of circular activities initiated increased with a significantly higher
number in reducing and innovating activities. Nestlé has invested in R&D projects to improve
their packaging, and lifecycle assessments were conducted for all their product categories.
They started to roll-out an Ecodesign tool called EcodEX, that is used to assess and optimize
environmental sustainability holistically across the entire value chain. This tool will be used
throughout the whole research period to conduct further training of packaging specialists in
different locations. Furthermore, Nestlé has actively encouraged its factories to reduce waste
by introducing new systems and setting new consumption and transportation requirements. It
has resulted in 39 Nestlé factories generating zero waste for disposal. Also, Nestlé has invested
in a specially designed train in India that will educate school children about recycling and
renewable energy. It aims to raise more than 1,5 young people’s awareness of the impact and
challenges of global climate change.
In the following year, 2013, most activities from 2012 were continued in line with
reducing waste and the innovation of packaging. Nestlé started the Commitment on Water
Stewardship, which means that Nestlé has to actively seek new opportunities to reduce, reuse
and recycle water in their operations. A ‘Water Ventures Learning Lab’ was installed in Florida
as an interactive touring exhibition that aims to raise awareness about sustainable water usage
and recycling among more than 100,000 people. On top of that, a combination of employee
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awareness training and new technology has enabled a Nestlé factory in la Panilla, northern
Spain, to reduce its water use by two-thirds through recycling.
In line with the Commitment on Water Stewardship, they have introduced a global
‘Watership Stewardship Master Plan’ in 2014. In this year there has been a significant increase
in circular activities. The majority of newly introduced activities involve recycling purposes,
such as new factories, manufacturing systems, and recyclable packaging. One of these includes
an investment in a new anaerobic digestion system at the Nestlé’s Fawdon confectionary
factory. It enables the upcycling of solid and liquid sewage waste to be converted into clean
water and methane gas using natural biological digestion processes. Moreover, in Mexico,
Nestlé has opened its most water-efficient factory, the Cero Agua diary factory in the state of
Jalisco. The factory uses the water vapor generated from evaporating cow’s milk. This water
is condensed, treated, and recycled for use as potable process water, and then again for cooling
and cleaning. They plan to replicate the process in other dairy factories, such as in South Africa.
Nestlé has also introduced a new downcycling activity in collaboration with small livestock
farmers providing them bio-digesters that turn animal waste into gas for cooking and liquid
fertilizer. Furthermore, by the end of the year, Nestlé joined the two-year UK industry
collaboration, the REFLEX Project, that includes Unilever as one of the project partners.
In 2015, Nestlé continued introducing projects spread over different categories of
circular activities. They have launched the Nestlé commitment to reduce food loss and waste,
and played a leading role in developing the consumer Goods Forum’s Resolution against food
wastage. Nestlé Waters started the construction of an agricultural biogas facility in Switzerland
that will provide renewable energy for production, as well as natural fertilizer for local farms.
In California, Nestlé invested in innovative technology to help reduce the amount of water it
uses at four facilities where food or pet care products are manufactured, and five water bottling
plants.
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Altogether, Nestlé initiated most of its circular activities from 2012 and onwards.
Results show that the amount of initiated activities related to the production stage of the product
life-cycle were the highest in 2012, and in the following years, they continued launching these
activities with a continuous pace of 2 à 3 activities each year. Subsequent cycling activities
were mostly initiated in the last 3 years of the research period, the same goes for the
downcycling activities. Only one upcycling activity started in 2010; the recycling activities
involved more down- than upcycling. Nestlé has involved more external than internal actors in
its circular activities. The majority of the activities within the traditional value chain were
developed exclusively by the company itself, and the majority of the partnerships that involve
external actors were developed in the last half of the research period. Furthermore, data shows
that Nestlé, over time, has almost equally performed its activities on a local as well as on a
global scale. No pattern was found on when Nestlé initiated activities on a local scale, however,
the results do show that most global performed activities were performed in the last half of the
research period. No activities were found with a regional scope.
Nestlé Activity system content 2010 2011 2012 2013 2014 2015 Total Innovating packaging 1 3 1 1 1 7 Reducing 3 2 2 1 8 Total production stage 0 1 6 3 3 2 15 Reusing 1 1 2 3 1 8 Total consumption stage 1 1 2 3 1 8 Collecting 1 1 1 3 Recycling 2 2 3 3 4 4 18 Downcycling 1 1 2 Upcycling 1 1 2 Total subsequent stage 2 2 4 3 5 5 21 Creating partnership 1 1 Total activities 2 4 11 8 12 8 45 Activity system governance Internal 1 1 5 2 3 2 14 Consumers 1 1 1 3 Suppliers 1 3 4
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Competitors 1 1 Total actors within 1 1 2 4 8 NGOs 1 2 2 2 7 Government 1 1 2 4 CUI 2 2 1 2 1 8 Local community 1 1 1 3 Total actors outside 5 4 4 6 3 22 Geographic scope Local 1 3 4 2 5 2 17 Regional 0 Global 1 1 4 3 4 3 16
Table 6: Data results Nestlé
6.1.3. Danone The results show that Danone has been continuously active on innovating and recycling
activities over the years. The amount of activities initiated were higher in the first half of the
research period and started decreasing in the second half. Moreover, they have initiated more
activities related to the subsequent circulation stage of the product lifecycle than to the early
stage of the product lifecycle. It appears that with regard to the recycling activities Danone did
not invest in any upcycling activities during the years 2010-2015. Furthermore, Danone joined
2 partnerships one starting at the beginning and one at the end of the examined time frame.
With regard to the activity system governance, Danone has continuously been developing its
circular activities mostly with actors external to the traditional value chain. When it comes to
activities developed within the value chain, the majority of them were developed internally.
No data was found on circular activities that involved competitors. The results also show that
Danone has involved more external actors in the first half of the examined time frame than in
the second half, especially in 2010 they have developed a high amount of partnerships with
external actors. All the waste collecting projects required partnerships with local municipalities
and/or NGOs to be developed. These include partnerships with NGOs such as Mundo
Sustenable, Reksa Buana Utama, INSEA, and FACE. Danone established a partnership with
Quantis to research its water footprint, they analyzed inventory consumption at each stage of
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production, transportation, consumer use and end of life. This partnership continued its
research over the full research period by contributing to the development of international (ISO)
and European (ENVIFOOD protocol) standards. The results with regard to the geographic
scope show that Danone has initiated an equal amount of local and global activities, equally
spread over the years. The number of regional activities is significantly low. The waste
collection projects were all installed on a local scale, remarkably most of them were launched
in Latin-American countries. Packaging innovations were mostly implemented on a global
scale since these were mostly related to Danone’s flagship brands that are available in multiple
countries. The results from the data analysis for Danone can be found in table 7.
Starting in 2010, Danone started multiple waste collecting projects in different
countries through its Danone Ecosysteme Fund. This fund aims to strengthen and develop the
activities of the partners who make up Danone’s ecosystem: farmers, supplier, local authorities,
transport and logistics operators, etc. The waste collection projects created by this fund required
partnerships with NGOs, local municipalities, and the local community. As a result, jobs were
created for waste pickers, and living conditions for local families were improved. Remarkably,
the majority of Danone’s waste collecting project were launched in Latin American countries
such as Mexico, Argentina, and Brazil. One of the waste collecting programs was launched in
Indonesia, it helped the local community called ‘Pemulung’ to generate more income for
families, provide health services in collaboration with the government, and provide a safe
working environment. Furthermore, in 2010 Danone has improved packaging of some of its
brands to either reduce waste or make it more recyclable. A partnership with Quantis was
established to conduct a lifecycle assessment on their Water Division. This partnership will
continue on doing research and improving packaging throughout the years of the research
period.
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In 2011, Danone kept on innovating its packaging specifically to increase the
percentage of recycled rPET used in bottles, these includes brands like Volvic, Evian, and
Bonafont. The same year Danone Ecosystem Fund added another waste collecting project in
Brazil, which was specifically focused on recycled PET. The project involved 900 waste
pickers in 24 cooperatives in 22 cities of the state of Minas Gerais.
In 2012 there was a significant increase in activities regarding packaging innovation.
Investments were made to include more sustainable materials, reduce weight, and develop new
standards for packaging, which includes investments in their Polish subsidiary Zywiec Zdroj.
Moreover, the MNE also further introduced the use of rPET down its production lines.
Downcycling projects were initiated by investing in a biomass boiler at the Baby Nutrition site
in Wexford, Ireland, and contributing to the Bio-Plastics Feedstocks Alliance platform with the
World Wildlife Fund to develop a “sustainability” standard for bio-based packaging materials.
Another initiative was launched to step up the efforts to recycle glass; partnerships were set up
to collect empty glass bottles from client restaurants that will be stored and transferred to glass
treatment plants for recycling. Furthermore, Danone introduced a policy that includes actively
reducing the weight of all paper and board packaging for each product, prefer the use of
recycled fibers and, where is not possible, prefer FSC certified virgin fibers. The policy
particularly aims to preserve the tropical forests in Indonesia and Congo and Amazon basins.
In the year 2013, another downcycling activity started in the Tschekov plant in Russia
in order to install a methanizer to recover sludge from treatment and produce biogas. The
energy produced represents 8% of thermal on the site. The production sites also use water for
production line cleaning cycles, these were optimized to reuse the most during pre-cleaning
cycles. Several investments in different production sites have been made to improve water
recuperation. Furthermore, Danone continued efforts to increase the proportion of recycles PET
used in bottles.
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In 2014, Danone started new waste collection projects which have a similar concept as
the one that started in 2010. Except, the project initiative of 2014 in Brazil formed an informal
waste collection system “Novo Ciclo” since no governmental organizations were involved.
This projects solely includes collaborations with NGOs, recycling banks, and the local
community. With this project, Danone Brazil experimented with a new supply chain model
that should enable them to collect 25 per cent of its packaging volumes on the market, while at
the same time improve living conditions of waste pickers working in the garbage dumps. In
France, Danone started a recycling project “LemonAide” by implementing a socially inclusive
and environmentally-friendly business model to tackle recycling and unemployment issues.
The project empowers people away from employment through a new job by providing them
social support, training, mentoring, and develop a new network of collection & recycling of
PET and other recyclables. Not unimportantly, the project will also create an innovative
mechanism to pass on the gift to promote social entrepreneurship in the circular economy.
Furthermore, Danone launched the ‘Terragre’Eau methanization’ project together with the
Association for the protection of rainwater catchment for Evian mineral waters. The project
involves a methanization unit to manage soil fertilization by recovering agricultural waste from
within the region.
In 2015, Danone formed a partnership with Veolia, a global leader in waste, water, and
energy management solutions. Its goal is to transform consumer habits and waste management,
adapt to scarce water, energy and raw materials, and make the transition to the circular
economy. That same year, Danone’s Lemon Tri system, which was introduced the year before,
was now used at Evian-sponsored events in France, such as the women’s golf championship
and the Parisienne women’s cycling race.
Overall, Danone initiated most of their activities during the first half of the research
period. They have invested more in subsequent cycling activities than in activities in early
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stages of the product lifecycle. With regard to the consumption stage, only one reusing activity
was found in the data. According to the data, Danone did not participate in any upcycling
activities. The first downcycling initiative was made in 2012, and included 2 more in the
following 2 years. More partnerships with external actors were formed than with actors within
the value chain, especially in the first half of the examined time frame. As to the geographic
scope, Danone has almost equally performed its activities on local and global scale. No pattern
was found in when these activities were initiated.
Danone Activity system content 2010 2011 2012 2013 2014 2015 Total Innovating packaging 2 2 4 2 1 1 12 Reducing 1 1 Total production stage 3 2 4 2 1 1 13 Reusing 1 1 Total consumption stage 1 Collecting 3 1 2 6 Recycling 2 1 5 2 2 2 14 Downcycling 2 1 1 4 Upcycling 0 Total subsequent stage 5 2 5 2 4 2 20 Creating partnership 1 2 3 Total activities 9 4 9 5 5 5 37 Activity system governance Internal 2 1 2 3 1 9 Consumers 1 1 1 3 Suppliers 1 1 2 Competitors 1 1 Total actors within 2 2 2 6 NGOs 3 1 2 3 1 9 Government 2 1 1 4 CUI 1 2 2 1 6 Local community 3 1 1 1 6 Total actors outside 9 3 5 3 2 22 Geographic scope Local 3 1 3 2 2 1 12 Regional 1 1 2 Global 3 2 3 2 1 2 13
Table 7: Data results Danone
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6.1.4. Coca-Cola Company The collection has led to the results that show that Coca-Cola Company (CCC) has initiated a
significant amount of recycling activities over the years. Remarkably, right after the year that
CCC invested the most in packaging innovations the amount of recycling activities increased.
The majority of activities involved in the early stages of the production lifecycle were initiated
in the first half of the examined time frame. In 2012, CCC made major investments in recycling
activities, which decreased in the following years. Despite the fact that CCC initiated a lot of a
recycling activities, from the data it cannot be found whether these activities involve
downcycling or upcycling activities. Only one downcycling activity was found in 2013. With
regard to the activity system governance, the results show that CCC has developed the majority
of its activities with actors external to the traditional value chain. In the first half of the time
frame the majority of the internal actors were introduced, however in the second half year, the
total amount of both internal and external actors decreased. When it comes to packaging
innovations, CCC is likely to develop these innovations internally. During the years,
partnerships with NGOs and governmental organizations were established to install waste
collecting and waste management programs in different markets. The data on geographic scope
shows that CCC has a remarkable high amount of activities performed on a local scale,
especially in the first half of the research period. In the second half of the time frame CCC’s
initiated activities were almost equally performed locally and globally. The majority of
recycling programs were launched on a local scale or focused on a specific target group.
Regional performed activities were the least initiated. The results from the data analysis for
Coca-Cola Company can be found in table 8.
In 2010, CCC invested in R&D projects and new packaging designs to reduce
packaging waste. They have launched a new recycling program in Thailand together with the
Thailand Institute of Packaging and Recycling Management for Sustainable Environment, a
new partnership with authorities in Thailand’s Pathum Thani province. The project’s goal is to
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develop a more comprehensive and effective integrated waste management program. A
partnership with a furniture manufacturer Emeco was formed to create a chair made of recycled
material; the 111 Navy Chair. The chair was created by combining 111 recycled PET plastic
bottles and other materials.
In 2011 CCC continued to encourage recycling and support the recycling cooperatives,
trying to make recycling a more common activity. They have implemented the successful I
LOHAS Japanese bottle design, which was introduced to Japan the year before, to several other
markets. The bottle is lighter than the traditional packaging and invites consumers to twist and
crush the bottle when it’s empty, helping to save space in recycling bins and saving money and
energy required for transport. The design uses their PlantBottleTM material, the first-ever fully
recyclable material that is made partially from plants. The material is similar to the traditional
rPET material, but with a lighter footprint on the scarce natural resources. Other bottle designs
were improved by reducing the use of material in its packaging design. Furthermore, a new
waste management systems were launched in line with the Regional Initiative for Inclusive
Recycling for Latin America, an effort to transform the recycling market in Latin America. The
project involved improving the socioeconomic status of recyclers and families; enhancing
private sector roles so that recycling cooperatives thrive in a competitive market, and
supporting public policy so that recycling cooperatives become part of the local waste
management system. This required partnerships with the Inter-American Development Bank
and Fundación AVINA. In Israel a campaign was launched to promote recycling that involves
online advertising and radio coverage. Pop-up stores in central Tel Aviv were installed to sell
handbags, T-Shirt, hats and other items made from recycled materials, these were designed by
local artists and fashion designers. Furthermore, CCC’s new bottling plant was installed in
South Africa for Valpré Spring Water. The plant uses energy obtained from non-fossil sources
and maximizes use of recycled materials.
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In 2012 CCC initiated recycling activities that both encouraged recycling behavior as
created collection points to dispose recyclable material. In Singapore, CCC brought together
civil society and government by introducing a special kind of vending machine to help increase
recycling rates across the country. The machine allowed consumers to dispose their empty
plastic beverage bottle and receive an award for being environmentally responsible. In the US
a grant from the Coca-Cola Foundation to Keep America Beautiful enabled 25,000 single-
stream curbside recycling carts to be donated to the city of Chicago. Moreover, Coca-Cola
Recycling, part of the Company’s North America Group, collaborated with Envipco to pilot
Reimagine Beverage Containers recycling centres that provide interactive collection kiosks to
encourage recycling. Another initiative in Thailand, Project Recover, was launched to provide
job opportunities for the local community and collect recyclable materials to turn them into the
cooperative for payment. This year was also the beginning of the EKOCYCLE program that
was launched in collaboration with musical artist and producer will.i.am, and other consumer
brands. It is a stand-alone brand initiative to encourage recycling and sustainability among
consumers through the marketing of lifestyle products made from recycled material. As the
longest continuous sponsor of the Olympic Games, CCC implemented a ‘zero waste
infrastructure’ during the London 2012 Olympics including waste and recycling bins designed
and positioned to maximize recovery rates. Even outside the Olympic venues, CCC installed
260 new recycling bins. On top of that, to further drive progress a new plant-PET technology
collaboration was formed that included Ford, Heinz, Nike and Proctor and Gamble.
In early 2013, CCC has joined the Ellen MacArthur Foundation as part of the Circular
Economy 100 Initiative, and the Bioplastic Feedstock Alliance together with seven major
consumer brands and the World Wildlife Fund. In collaboration with Zero Waste Scotland,
through using interactive recycling bins and social media more than 178,000 people were
encouraged to recycle at four events in France and Great Britain. Furthermore, the same
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partnership that was formed in 2011 has launched additional waste management systems in
Mexico, Panama, and Chile, that will benefit more than 2,600 recyclers via training and
formalization of their roles. For Brazil’s 2013 FIFA Confederations Cup, approximately 3,800
recycling bins and boxes were installed, and dozens of volunteers were trained to encourage
recycling by the spectators. In late 2013, a partnership with Ford was announced to use
PlantBottle technology beyond packaging for the first time. The material will be used for the
interior of a demonstration of the plug-in hybrid Ford Fusion Energi.
In 2014, investments were made in new plants and line start-ups to increase CCC’s
rPET capacity in countries including China, Japan, Taiwan, Ecuador, Colombia, and many
more. A water restoration project started in partnership with Belgian non-profit organization
Natuurpunt, an effort to help replenish and enhance groundwater at the Stappersven nature
reserve, located near one of their production facilities. Another collaboration involved CCC
joining the Recycling Partnership aiming to increase curbside recycling initiatives in the US.
Furthermore, in line with the EKOCYCLE program, more than 1,500 new AKOCYCLETM
Cube 3D printers were donated to more than 125,000 middle and high school students. The
printer converters recycled plastic into an almost infinite variety of products. On top of that,
EKOCYCLE opened its own special shop-in-shop at Harrods in London.
Unfortunately, not a lot of data was found on the year 2015. The only activity found is
a collaboration with W Hotels Worldwide to shake up the hotel industry. New EKOCYCLE
brands were introduced to W Hotels around the world including bedsheets and bedside
chargers.
Overall, over the years CCC has initiated subsequent cycling activities more frequently
than activities related to the production stage of the product lifecycle. The majority of the
initiated production stage activities started in the first half of the research period, which
decreased afterward. The results show only one downcycling activity that was launched in
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2013. With regard to the activity system governance, CCC has formed more partnerships with
actors that are external to the traditional value chain, especially during the years 2012 and 2013.
The majority of the activities that were developed within the value chain were developed
exclusively by the company itself. As regards the geographic scope, more activities were
implemented on a local scale than a global scale. The majority of the locally performed
activities were developed in the first half of the examined time frame, whereas most global
performed activities were developed in 2012 and 2013.
Coca-Cola Company Activity system content 2010 2011 2012 2013 2014 2015 Total Innovating packaging 5 2 1 1 9 Reducing 1 4 5 Total production stage 1 9 2 1 1 14 Reusing 0 Total consumption stage 0 Collecting 1 2 2 5 Recycling 2 5 10 7 5 1 30 Downcycling 1 1 Upcycling 0 Total subsequent stage 2 6 12 9 5 1 35 Creating partnership 1 1 2 Total activities 3 16 14 10 6 1 51 Activity system governance Internal 3 3 2 2 10 Consumers 3 3 1 7 Suppliers 1 1 2 Competitors 2 2 4 Total actors within 4 5 4 13 NGOs 1 2 2 5 2 12 Government 1 2 3 CUI 1 3 5 4 2 1 16 Local community 2 4 3 1 10 Total actors outside 3 7 13 12 5 1 41 Geographic scope Local 2 6 6 3 3 1 21 Regional 1 2 2 1 6 Global 1 2 4 4 2 13
Table 8: Data results Coca-Cola Company
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6.2. Cross-case analysis The following paragraph will present the cross-case analysis that involves all cases. The 4
MNEs will be compared to each other in relation to the propositions in order to assess
similarities and differences in how these MNEs have integrated the circular logic into their
business model. First, a comparison is made per activity system content, activity system
governance, and the geographic scope, afterwards an overall comparison will be presented.
Regarding the activity system content, all four MNEs were the most active in recycling
activities. The results show that majority of the activities of the MNEs that are related to the
early stages of the production life-cycle were often initiated in the first half of the research
period. Over the years, all four MNEs have gradually integrated the use of polyethylene
terephthalate (rPET) plastic in their packaging, especially in plastic bottles. The amount of
subsequent cycling activities was the highest in 2012, from where on it gradually decreased.
As regards the recycling activities, the results show that CCC was significantly the most active
MNE in recycling. Unilever and Nestlé both first invested in an upcycling activity before
making investments in downcycling activities, whereas CCC and Danone only invested in
downcycling activities. However, over time, all four MNEs invested more in down- then
upcycling activities. Also, Nestlé, Danone, and CCC initiated more subsequent cycling
activities, where on the contrary, Unilever focused more on ways to innovate its packaging in
order to reduce packaging material, weight, and waste. Furthermore, not unimportantly, all four
MNEs actively promote the circular economy by joining alliances or other partnerships. The
MNEs are well known by the Ellen MacArthur Foundation by either official partnerships or
support by press releases.
In regard to the partnerships formed along with the circular activities, the results show
that all four MNEs have developed more partnerships with actors that are external to the
traditional value chain, than internal ones. Of the activities that were developed within the value
chain, they have been mostly developed in the first few year of the examined time frame. The
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majority of these internally developed activities were exclusively developed by the company
itself. For Unilever, Danone, and CCC the amount of exclusive internal activities started to
decrease over the years, whereas for Nestlé it stayed on a continuous level. Unilever and Nestlé
started to involve more external actors towards the end of the time frame. Danone, on the other
hand, did the opposite and involved most of its external actors during the first few years.
However, the majority of Danone’s partnerships started in 2010 when they launched their waste
collecting program that required partnerships with NGOs, governmental organizations, and
local communities. They remarkably all involved people who were not necessarily consumers,
but visitors or inhabitants of the respective area. CCC involved the most external actors in 2012
and 2013 in which it was highly active in subsequent cycling activities. Overall, during the
years 2010-2015 activities involving external actors were more common than with internal
actors. Furthermore, the MNEs developed partnerships with same organizations or with each
other. Unilever and Nestlé both joined the REFLEX Project along with other organizations.
Nestlé and Danone both started a partnership with Quantis to perform a lifecycle assessment
on its products. Danone and CCC have 3 common partnerships that include the Bioplastic
Feedstock Alliance coupled with the World Wildlife Fund, and a collaboration with AVINA.
The results show irregularity with regard to the geographic scope of the circular
activities. Danone and Nestlé equally perform their activities on a local and global scale,
equally spread over the years. Unilever performed more globally implemented activities, where
on the other hand, CCC performed more locally implemented activities. Regional activities
appear to be the least common for all 4 MNEs. However, CCC still implemented a significant
higher amount of regional activities compared to the other 3 MNEs. All 4 MNEs invested in
either formal or informal waste collecting activities. Unilever launched a recycling projects
with retailer and NGOs, whereas Nestlé installed waste collecting points particularly for the
collection of their Nespresso cups. A significant amount of waste collecting programs by CCC
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and Danone launched where specifically launched in South American countries. These projects
were installed to collect waste in a certain region, while at the same time jobs were created,
which in turn improved living conditions of the local community.
Overall, of all 4 MNES, CCC has initiated the most circular activities within the time
frame of 2010-2015, where on the other hand Danone has initiated the least. The MNEs focused
more on activities related to the early stages of product life-cycle in the first half of the time
frame examined. Whereas subsequent lifecycle activities remained important throughout the
years, however for each MNE it was the highest in the year 2012. For all 4 MNEs, downcycling
activities were more common than upcycling activities, and all upcycling activities were
initiated before the downcycling activities were introduced. The MNEs all developed most of
their activities with external actors. Patterns show that over time, MNEs start to gradually
decrease the amount of activities developed within the value chain. Furthermore, the results
show no pattern in the geographic scope of the activities, it appears that each MNE has its own
strategy to decide on which scope the new activity should be performed.
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7. Discussion This section will discuss different aspects of this study. First, the findings of this multiple case
study will be discussed in order to answer the research question in relation to the literature.
Secondly, the contributions to different streams of literature will be discussed. The last
paragraph contains the limitations of this research and possible avenues for future research.
7.1. Propositions Each proposition developed in section 4 will be discussed in relation to the findings and
literature in order to answer the research question “How do multinational enterprises in the
FMCG-industry integrate the circular logic in their business model over time?”. Table 9 shows
an overview of the proposition and whether these are supported or not. Revised propositions
were formulated, if necessary, in order to take the findings into account.
Based on the literature review it is expected that a closed value chain requires managers to
design, control, and operate a system maximizing valuef creation over the entire lifecycle of a
product, striving to dynamically recover value from different types of returns over time
(Kortmann & Piller, 2016). This goes in line with the idea of Murray et al. (2015) the ‘waste-
as-food’ concept, wherein unwanted outputs of one industrial process are used as raw materials
in another industrial process, and the three Rs of Reduce, Reuse, and Recycle that have become
central concepts to the circular economy. These stages and concepts are identified in the four
sources of economic and sustainable value creation within the circular economy developed by
the Ellen MacArthur Foundation (2012); the power of inner circle (less cost production); the
power of circling longer (lengthening lifetime of products); the power of cascading use (waste-
is-food); and the power of pure circles (where source materials remains uncontaminated, and
therefore improving redistribution efficiency and material productivity). The findings show
that not all companies initiated activities over the entire product lifecycle. CCC did not develop
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any reusing activities at all, whereas Unilever and Danone only developed a few. Moreover,
the findings show that subsequent cycling activities were not necessarily initiated after
production stage activities were developed. Most subsequent cycling stage activities performed
by Danone and CCC were developed at the beginning of the time frame and then decreased
afterwards, whereas Unilever and Nestlé developed the majority of its subsequent cycling
activities later in the research period. This might be explained based on the complexity of
subsequent cycling activities that might require more time and experimentation to be
implemented. One of these experimentation can also be identified in Danone’s waste
management projects, launched in Brazil in 2014, that was designed as an experiment with a
new supply chain model that should enable it to collect 25 per cent of packaging volumes on
the markets. According to Chesbrough (2010), it is important for firms to have a positive
attitude towards business model experimentation, these trial-and-error processes belong to
BMIs, entailing continuous and incremental adjustments (Sosna et al., 2010). Waste
management programs might be more complex since they incorporate a triple bottom line
approach and consider a wide range of stakeholder interests, including society and
environment, which are key drivers of competitive advantage (Bocken et al., 2014). In general,
initiating subsequent cycling activities appeared to be more common when integrating the
circular logic. Therefore, the first proposition regarding the product lifecycle is only partly
supported.
Revised proposition 1) It is likely that MNEs initiate more subsequent cycling than production
function activities when integrating the circular logic.
Findings show that the MNEs were likely to adopt more downcycling activities than
upcycling activities over time. Moreover, Danone and CCC did not make any investments in
upcycling activities at all. This might be because upcycling activities converts waste into
products with a higher value, which involves a more complex and expensive process.
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Furthermore, another important factor is that there might be more waste available that is only
suitable for downcycling and not for upcycling. For example, downcycling applies to most
plastics, whereas upcycling might only apply to rPET plastics. Therefore, it might be more
profitable for the MNEs to develop downcycling activities instead of upcycling activities. As
the circular logic is defined by ensuring that little waste is generated throughout the production
process and in the life history of the product (Murray et al., 2015), downcycling would be the
most sensible way of recycling since it is able to consume more waste than upcycling.
Therefore, the second proposition is only partly supported, and the following revised
proposition is formed based on the data.
Revised proposition 2) It is likely that MNEs initiate more downcycling activities than
upcycling activities when integrating the circular logic.
Due to rising pressures, collaborations between firms and other key stakeholders are
becoming more important (Lowitt, 2013). However, based on the literature it is expected that
over time MNEs establish more partnerships with actors external to the traditional value chain.
Kortmann & Piller (2016) argue that the integration of external partners into the new product
or service development process has become more frequent today, because the firm is a system
of interdependent and transcending activities that span internal and external firm boundaries
and enables the creation and capture of value in concert with external partners over time. The
MNEs have established more partnership with external than internal actors over time. The
majority of the activities that are developed within the traditional value chain are mostly
developed solely by the company itself. Chesbrough (2010) stresses the importance of internal
developments; companies need to identify the right internal leaders for a business model to
change. To deliver a new and better business model, these leaders need to manage the results
of the processes of the BMI. For example, employee training and engagement campaigns
launched by Unilever and Nestlé teaches the culture of the organization to learn to embrace the
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new model while keeping the effectiveness of the current business model until the new one can
be taken over completely. According to Zott & Amit (2010), a business model is geared
towards total value creation for all parties involved, which implies that all stakeholders should
be involved in the transition to a circular logic. Over time the MNEs have established
partnerships with all kinds of actors both internal as external to the traditional value chain,
capturing value by co-defining the overall ‘size of the value pie’. Therefore, the external actors
involved in the circular activities might eventually become part of the traditional value chain.
It was found that in general all waste management programs required partnerships with actors
external to the traditional value chainto be developed, whereas packaging innovations were
often developed company itself. In general, the amount of partnerships with external actors
appears to increase faster than partnerships with internal actors. Therefore, the third proposition
is only partly supported.
Revised proposition 3) It is likely that MNEs develop more partnerships with external actors
than internal actors when integrating the circular logic.
Reconfiguring the existing business model is a challenging process for all businesses,
however, for MNEs it is particularly demanding since they need to decide to what extent and
how to implement it across multiple locations in which they operate. MNEs have to take into
account potential heterogeneity in institutional environments when implementing changes,
therefore a more complex ‘activity system’ is required (Zott and Amit, 2010). Based on the
literature review it is expected that MNEs are likely to perform circular activities locally, before
extending it to a global scale. A finding that confirms this statement is the opening of Nestlé’s
water-efficient factory in 2014 after the project turned out to be a success Nestlé planned to
replicate the process in other countries across the world. However, based on the findings no
pattern was found in when the MNEs performed the activities on a local or a global scale. It
appears to be highly dependent on the kind of activity that is initiated. For example, the MNEs
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implemented new packaging designs of their flag brands globally, since they are available in
multiple countries. Waste collecting and recycling campaigns were developed more locally
since these projects were often targeting the local community. Findings show that regional
activities were the least common to be developed. Therefore, the fourth proposition is not
supported and a revised proposition is formulated.
Revised proposition 4) MNEs are likely to integrate the circular logic both on a local and
global scale.
After all, by testing the propositions in order to answer the research question all
propositions needed to be adjusted based on the findings of the data analysis. The findings
show that MNEs are more likely to initiate subsequent cycling activities when integrating the
circular logic since they already form two sources of economic and social value creation of the
circular economy (Ellen MacArthur Foundation, 2012). Downcycling activities are developed
more than upcycling activities since it has more waste available to consume and is more
profitable. The findings show that MNEs do not change their strategy of initiating activities as
they have further integrated the circular logic, but instead have a preference for one strategy in
general, which in this case are; subsequent cycling activities, downcycling, and external actors.
Furthermore, circular activities appear to often require partnerships with actors outside of the
traditional value chain that might eventually become part of the traditional value chain. Finally,
findings showed that activities related to the circular economy can be performed on both a local
or a global level depending on the kind of activity.
Proposition Per company In
general Revised proposition
P1) Over time MNEs are likely to start integrating the circular logic in the beginning of the product lifecycle, and then extend it to
Unilever: Supported Nestlé: Supported Danone: Not supported CCC: Not supported
Partly supported
RP 1) It is likely that MNEs initiate more subsequent cycling than production function activities when integrating the circular logic.
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the end of the product lifecycle. P2) Over time MNEs are likely to initially adopt downcycling activities and then integrate upcycling activities.
Unilever: Not supported Nestlé: Not supported Danone: Supported CCC: Supported
Partly supported
RP 2) It is likely that MNEs initiate more downcycling activities than upcycling activities when integrating the circular logic.
P3) Over time MNEs are likely to increasingly establish partnerships outside their ‘traditional’ value chain.
Unilever: Supported Nestlé: Supported Danone: Not supported CCC: Not supported
Partly supported
RP 3) It is likely that MNEs develop more partnerships with external actors than internal actors when integrating the circular logic.
P4) Over time MNEs are likely to integrate the circular logic on a local scale then extend it to a global scale.
Unilever: Not supported Nestlé: Not supported Danone: Not supported CCC: Not supported
Not supported
Revised proposition 4) MNEs are likely to integrate the circular logic both on a local and global scale.
Table 9: Result of the propositions
7.2. Theoretical and managerial contributions This study has made several contributions to management literature. First of all, this study
contributes to the current literature on sustainable business model innovation as it provides an
overview of how businesses can alleviate its environmental footprint by changing its logics.
Resource deficiency and product waste are typical characteristics of the linear economy (Pearce
& Turner, 1990), which in combination with population growth is placing a strain on the
world’s natural resources. The need for a new economic model is increasing, and the new
possibilities in technology and social factors have enabled the transition towards a circular
economy. Therefore, many argue that the time is right to take advantage of the potential
benefits of the circular economy. This study helps to improve the design, implementation, and
performance of a closed-loop economy in the sustainable business model in theory and practice
by providing an overview of initiated activities, involved actors, and activity scopes that are
involved in the integration of the circular economy. As a result, this study adds to the literature
on the circular economy in particular. Simultaneously, this study answered to the California
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Management Review’s call for papers on the “Circular economy: Managerial and policy
implications”, due to its increase in attention in both business and political discussions. The
call asked for papers that provide a timely debate on the circular economy in both theory and
practice.
By examining how the circular economy is integrated by companies with an
international business model, a contribution to the international management literature is made.
The findings of this study go beyond the study of Kortmann & Piller (2016) as the results show
findings on a business model that involves a more ‘complex’ activity system (Murray et al.,
2015). MNEs have to decide whether to implement new activities locally, regionally, or
globally, and gradually change the material practices across the subsidiaries in multiple
countries. Another contribution is made to the literature on institutional logics by assessing the
transition from a linear to a circular logic. MNEs face potential heterogeneity in institutional
logics, due to their presence in multiple countries. This creates critical challenges in changing
norms, values and materials practices towards the circularity. Since research is limited on
changing logics in multiple institutional environments, it is valuable that the companies
representing the cases have an international orientation. Furthermore, this study also
contributes to the waste and resource management study as it elaborates on the implementation
of reducing, reusing, and recycling activities. As the circular economy is a fairly new concept,
waste and resource management literature is limited on how organizations operate a value chain
in which waste is being considered as a resource, and resources are maintained within the
system (Pearce & Tuner, 1990).
Altogether, by researching how MNEs have integrated the circular logic in their
business model this study has contributed to the literature on sustainable BMI, management,
international management, institutional logics, and waste and resource management. The
empirical research is relevant for practice for managers and policy makers.
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7.3. Limitations and avenues for future research Along with its contributions, this study has also faced limitations. In order to reduce researcher
bias and increase rigorousness, the data was analyzed with qualitative data analysis program
NVivo. Nevertheless, as the archival data existed out of corporate documentations it could be
argued that the available data can be biased in favor of the respective company. Since the
collected data was only analyzed by one researcher the findings might be biased as well. A
suggestion for future research would be to involve multiple researchers and sources to avoid
bias. A follow-up research is also recommended since the findings of this exploratory study,
even when drawn carefully, are only tentative (Saunders & Lewis, 2012). Another limitation
might be the length of the research period. Although, the circular economy is a fairly new
concept, activities that were initiated before 2010 might be valuable because they might
contribute to the circular economy as well. Therefore, it would be advisable for future research,
to replicate this study and starting the research period in the year 2002; in which the circular
economy got officially accepted by the Chinese government (Su & Zhou, 2005).
As the findings of this study show that MNEs mainly initiated downcycling activities,
it is still possible that the MNEs integrate more upcycling activities in the future. Perhaps no
pattern of; the MNEs first integrating downcycling activities and then integrating upcycling
activities, has been able to be discovered yet because the research period was not long enough,
and thus the circular logic was not integrated sufficiently. Therefore, an avenue for future
research might be to replicate this study focusing on the research period 2015-2020. The
findings need to be compared to the findings of this study to see if any patterns can be
discovered and whether the second proposition of this study is supported or not.
Another limitation is that the findings of this study cannot be generalized for other
industries. Therefore, a future avenue in line with this particular study would be to analyze how
companies integrate the circular economy in the service industry. Possible companies to
represent the cases would be companies like Google and Cisco that are both Global Partner of
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the Ellen MacArthur Foundation. Since it is not applicable for this industry to initiate circular
activities that involve tangible products, i.e. innovating package designs, it would be interesting
to examine what activities this sector can adopt to integrate the circular logic into their business
model. Furthermore, a follow-up research examining the pattern and differences between the
two industries might be interesting for literature on the circular economy in general. Key
norms, values, and material practices of the circular economy can be identified based on the
findings of this comparative analysis. Another interesting avenue is to do research on
environmental and financial benefits that firms operating the circular logic can provide. The
study could research what the effects of circular activity that is initiated, i.e. the amount of
water that is saved due to a new water-efficient system. Based on the findings, the study could
provide an overview of the most and least effective circular activities.
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8. Conclusion Population growth places a strain on the world’s natural resources. The need for a new
economic model increases, and the new possibilities in technology and social factors make it
possible to make the transition towards a circular economy. Therefore, this study aims to
answer the question in how MNEs in the FMCG-industry integrate the circular logic into their
business model over time. An explorative multiple case study is conducted based on MNEs
that are key players in the FMCG-industry and actively promote the circular economy;
Unilever, Nestlé, Danone, and Coca-Cola Company.
The widespread call for closed-loop value chains has triggered an increase in interest
among researchers for the study of the circular economy. Yet, research on the circular economy
among management scholars has focused on its origins and conceptualization (Kortmann &
Piller, 2016; Murray et al, 2015). Both literatures exploring the process of institutional logic
shift and the one investigating business model innovations have highlighted the challenges
companies have to face in these transformation. Kortmann & Piller (2016) argue that in order
to create a closed-loop value chain managers need to develop competitive and integrated
business models that extend the traditional production stage, include service offerings in the
consumption stage, and emphasize the circulation or recovery of distributed products in the
subsequent circulation stage. However, literature still lacks in how the circular logic is
integrated into the business model of a MNE. Due to a MNE’s presence in multiple countries,
it has to face critical challenges in the change of norms, values, and material practices towards
circularity, thus requiring a more complex ‘activity system’ (Zott & Amit, 2010). Path
dependency (Bohnsack et al., 2015), the need for a trial-and-error approach (Sosna et al., 2010),
and the importance of keeping the effectiveness of the current business model until the new
one can be taken over (Chesbrough, 2010) are core features of this transition process.
Furthermore, as a result of operating in different institutional environments, MNEs have to face
potential heterogeneity in institutional environments. The process of moving from one
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dominant logic to another involves actors using their power to accomplish such shifts (Reay &
Hinings, 2005). Since this research focuses on the transition from a linear to a circular logic, a
longitudinal approach had to be adopted in order to gain a thorough understanding of the
transformation towards the circular economy.
Findings show that, when integrating the circular logic, they are more likely to initiate
subsequent activities since they contribute to the circular economy the most. Downcycling
activities are more profitable and effective than upcycling activities since there is more waste
available suitable for its process. The majority of the circular activities require partnerships
with actors that are external to the traditional value chain. Furthermore, it also appeared that
the activities are either performed locally, regionally or globally, depending on the activity’s
stage in the product lifecycle.
By doing research on the integration of the circular logic into the business model this
study contributes to the field of sustainable BMI by helping to improve the design,
implementation, and performance of a closed-loop economy in the sustainable business model
in theory and practice. This study has also answered the call of California Management Review
for papers on the circular economy and contributed to management literature. Specifically, by
focusing on the change in logics in business models of MNE’s this paper has made a
contribution to the literature on institutional logics, international management, and waste and
resource management.
Future research suggestions can be derived from this study. In order to identify any
overlooked patterns, it is suggested that this research is replicated taking into account the years
preceding the research period in this study, and an additional research that examines the next
6 years. Another possible avenue would be a research focusing on the integration of the circular
economy of companies in the service industry. Since it is not applicable for this industry to
initiate circular activities related to tangible products, it would be interesting to examine what
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activities this sector can initiate to integrate the circular into their business model. Furthermore,
a follow-up research examining the pattern and differences between the two industries might
be interesting for literature on the circular economy in general. Key norms, values and material
practices of the circular economy can be identified based on the findings of this comparative
analysis. Another interesting avenue would be to research the effectiveness of each circular
activity based on environmental and financial benefits. In doing so, an overview can be created
with the most and least effective circular activities.
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9. Abbreviations BM Business Model
BMI Business Model Innovation
CCC Coca-Cola Company
CSR Corporate Social Responsibility
FMCG Fast Mover Consumer Goods
GDP Gross Domestic Product
GRI Global Reporting Initiative
LEED Leadership in Energy and Environmental Design
MNE Multinational Enterprise
SBM Sustainable Business Model
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